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STI Update 26th February 2008

Dow Jones went up 189 points yesterday and our STI opened and gapped up at 3099 and closed +16 points at 3077.

The question in most people's minds is why the market went down today from opening. One common trade that most speculators or traders take is when dow goes up around 200 points, they safely ASSUME that STI is going up. So here's the truth :

When dow goes up 200-300 points,

1) Stock prices will surely open higher --> TRUE
2) Stock prices will surely go up from opening price --> FALSE

So what determines whether the market is going up or down after the opening bell?

U can see from the previous post of the STI chart that STI is still within the trading range resistance of 3120 and has not yet broken out from the trading range even at OPENING BELL with Dow's bullishness of +200 points. If the market cannot go up, it shall come down.

There were other fishy indicators in the morning also, Nikkei was up only 30-40 points in the morning and Hang Seng dropped straight from the start. But most importantly, STI was still stuck with the 3120 resistance as overhead.

Be safe, not sorry. Have a cut loss and dont make wrong assumptions. Its a very hard market to trade now and be cautious with every step.

Oberservations today:

1) Construction stocks are very weak.
2) Banks are showing strength.
3) HSI has broke out on the 10 min chart.
4) China stocks likely to be bad light for next few days after Synear profit warning and a disastrous showing.
5) Market volatility is shrinking and its very possible a bottom is around the corner.

I will post up a chart analysis of Cosco and SGX soon. I am bullish on Cosco and bearish on SGX. Cheers!

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